ABI Rejects $10-a-Share Buyout Offer From a Director
ABI American Businessphones Inc. in Irvine, a vendor of business telephones, turned down an unsolicited offer Friday from one of its directors to buy the company for $10 a share, or about $16.8 million.
One analyst called that a bargain basement price. ABI has been ranked as one of the nation’s fastest-growing small companies.
But its stock has been trading at what analysts said were unusually low prices since ABI agreed to be acquired late last year for the equivalent of $9.50 a share.
Until that deal with Connecticut telephone equipment manufacturer TIE/Communications fell through in May, the price was effectively held down because investors weren’t willing to pay more than $9.50 a share for the stock.
Since the deal crashed, the stock has been rising and passed $10 a share to close at $10.125 Friday, when the company disclosed the unsolicited offer from director Jean R. Stiegemeier.
Without management support, Stiegemeier will have a difficult time acquiring the company. Management owns almost half of the 1.6 million shares of stock, and company founder and President Frank J. Feitz alone owns a third.
Stiegemeier wanted six-month options to buy management’s stock and wanted an answer by Monday, the company said.
Feitz said in a statement Friday that he was “not willing to tie up my stock at a $10 price without adequately exploring other alternatives for the company.”
Stiegemeier, of Deep Haven, Minn., could not be reached.
ABI sought the marriage with TIE/Communications after October’s stock market crash, when ABI stock took a nose-dive and the company was pressed for cash to finance its rapid growth.
The relatively low price of the stock and the publicity about ABI may attract other suitors with higher offers for the company, said F. Van Kasper, a San Francisco stock analyst.
Last year, when the stock was trading at $13.50 before the October crash, ABI earned 68 cents a share, Kasper pointed out. This year, while the stock has been trading at much lower prices, ABI is expected to earn $1.05 a share.
“We think it could easily be trading at $13 to $15 (a share) based on what it’s earning,” Kasper said.
Founded in 1982, the company earned a healthy $1.1 million last year on revenues of $27 million. ABI sells, installs and services business phone systems for small and mid-size companies in California and the Southwest.
Stiegemeier became a director in 1985, when ABI bought his company, California Telamerica Inc. in Torrance for 130,000 shares of ABI stock and $300,000 in cash.
Stiegemeier told the federal Securities and Exchange Commission on Monday that he now owns 5.4% of ABI’s stock. He remains a consultant to the company responsible for finding “business opportunities in the Midwest.”
